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City Index

Offers three ways to trade: Forex, CFDs, Spread Betting

 Offers over 12,000 instruments
City Index
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Your capital is at risk
0.5points See All Spreads
£25Min. Deposit Learn More
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Trust Score:

A

Used by:

140,000

Established in:

1983

Regulated by:

Financial Conduct Authority, A...

CFDs are leveraged products and can result in the loss of your capital. All information collected on 1/11/2017.

The Ultimate Guide to

Choosing a Broker
For Commodity

Not sure which broker is right for you?

Don’t worry - we’ve got you covered. In this guide, you’ll learn:

Ready?

Part 1

Why Choose City Index
For Commodity?

City Index scored best in our review of the top brokers for commodity, which takes into account 120+ factors across eight categories. Here are some areas where City Index scored highly in:

  • 34+ years in business
  • Offers 12500+ instruments
  • A range of platform inc. MT4, Web Trader, Tablet & Mobile apps
  • 24/7 customer service
  • Tight spreads from 0.5 pips
  • Used by 140,000+ traders
  • Allows hedging
  • 3 languages
  • Leverage up to 1:200

City Index offers three ways to trade: Forex, CFDs, Spread Betting. If you wanted to trade GOLD through copy trading or other means, skip to part two.

The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.

City Index have a A trust score, which is good. This is largely down to them being regulated by Financial Conduct Authority, ASiC and MAS, segregating client funds, being established for over 34 years, and much more. For comparison:

Trust Score comparsion

City Index
Trust Score A
Year Established 1983
Regulated by Financial Conduct Authority, ASiC and MAS
Uses tier 1 banks
Company Type Private Private Private
Segregates client funds

The second thing we look for is the competitiveness of the spreads, and what fees they charge. We've compared these in detail in part three of this guide.

Part 2

Who City Index is (& Isn’t)
Suitable For

As mentioned, City Index allows you to trade in three ways: Forex, CFDs, Spread Betting.

Suitable for:

  • Spread Betting
  • CFD Trading
  • Forex Trading

Not Suitable for:

To trade with City Index, you'll need a minimum deposit of $100. City Index offers a range of different account types for different traders including a micro account, mini account, .

Finally, City Index isn't available in the following countries: CF, TD, CG, CG, CI, CU, GN, ER, GN, FR, GW, HT, IR, IQ, KR, LB, LR, LY, MM, NZ, NG, SL, SO, SD, SY, TM, UZ, VE, EH, YE, ZW. They do not offer islamic accounts either.

Part 3

A Comparison of City Index vs. vs.


Want to see how City Index stacks up against and ? We've compared their spreads, features, and key information below.



Spread & fee comparsion

The spreads below are illustrative. For more accurate pricing information, click on the names of the brokers at the top of the table to open their websites in a new tab.
City Index
Fixed Spreads
Variable Spreads
EUR/USD Spread 0.5
GBP/USD Spread 2.1
Gold spreads from 0.5
Silver spreads from 2.5
Copper spreads from 40.0
Crude Oil spreads from 0.4
Natural gas spreads from 18
DAX Spread 1.0
FTSE 100 Spread 1.0
S&P500 Spread 0.4

Comparison of account & trading features

City Index
Spread type Fixed
EUR/USD Spread 1983
EUR/GBP Spread Financial Conduct Authority, ASiC and MAS
Crude Oil Spread
Gold Spread Private Private Private
DAX Spread

Part 4

Trading Commodities Online

What is a Commodity?

A commodity is a physical product that is typically bought and sold in an established financial exchange, for example the Euronext. However, retail traders can also trade commodities on a CFD trading platform. Regardless of which producer produces a commodity, it maintains uniformity even though there may be slight differences in product quality. The commodities can be broken down into four main categories: precious metals, non precious metals, energy and agricultural. Some of the most popular commodities include:

How are commodities traded?

Commodities are usually traded on the futures market through futures contracts. These are short term contracts with definite expiry dates. In a commodity futures contract, the seller agrees to deliver an agreed quantity of a commodity at some date in the future at a pre-determined price. The buyer agrees to buy the product and to make payment by the agreed upon date.

The futures market is the exchange that connects the sellers of commodities with the buyers. Therefore, anyone seeking to trade in commodities may purchase a futures contract through a commodities broker. To establish a contract, a minimum deposit must be paid and a brokerage account would be established for the trader. Since commodity prices are always changing, the value of the brokerage account will change during the contract period. If the value falls below a certain level, the broker will make a margin call, requiring the account holder to deposit additional funds into the account to maintain an open position. Usually, these accounts are highly leveraged which means that small changes in price will result in huge potential profits or losses. This is one of the characteristics that draws traders to commodities.

Commodities may also be traded indirectly through the equities market, through mutual funds, through exchange-traded funds (ETFs) or through a contract for difference (CFD).

Unlike manufacturers, most traders do not want the actual delivery of the commodity they are trading, therefore a commodities trader will usually opt to roll-over the futures contract for that commodity. A commodities roll-over effectively extends the expiration date for the settlement of the contract, allowing the trader to avoid the costs associated with the settlement of an expired futures contract.

Commodities trading with CFDs and leverage

Commodity trading is a popular choice for traders because of the increased upside (and increased downside) potential offered by the high leverage usually offered on commodities.

What this means is that the trader can start off with a smaller deposit to trade but he can make multiples of his investment if the commodity price moves in a favourable direction, however, the opposite is true if the market moves against the trader and losses can be magnified. The broker essentially lends the trader the remaining portion of the actual commodity value, this will usually be charged an overnight financing charge. For example, popular CFD broker CMC Markets will charge an overnight fee + / – 2.5% annual charge above or below the relevant base rate.

For example, let’s assume you buy a commodities futures contract for gold, where the Cost per ounce of gold = $1,000.00.
You agree to 2 contracts at a weight of 100 ounces per contract.
The full contract cost = $1,000 x 2 x 100 = $200,000.
You make a margin deposit of 6% which is (0.06 x 1,000 x 2 x 100) = $12,000.00.
The broker is technically lending you the difference of $188,000.00.
Let’s assume the price of gold increases to $1010 per ounce
Profit = ($1010 x 200) – (200,000) = $2,000, return = 2000/12000 = 16.67%

So, with an account balance of $12,000, you would have made a profit of $2000 (16.67%) with just a 1% price increase.

However, it is important to note that if the price had fallen by the same amount, you would have made a loss of 16.67% with just a 1% fall in price.

Summary: Why traders chose to trade commodities with CFDs

Leverage and smaller contract sizes are two factors that attract traders to trading futures contracts as CFDs (contracts for difference) rather than traditional trading. With a combination of smaller contracts and leverage, the intitial capital requirements for traders is significantly lower.

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